Answer: Account B is worth the most after 10 years. It will have a value of $21591
Step-by-step explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1 + r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
Considering account A,
P = $16000
r = 3% = 3/100 = 0.03
n = 4 because it was compounded 3 times in a year and n = 12/3 = 4
t = 10 years
Therefore,
A = 16000(1 + 0.03/4)^4 × 10
A = 16000(1 + 0.0075)^40
A = 16000(1.0075)^40
A = $21574
Considering account B,
P = $16000
r = 3% = 3/100 = 0.03
n = 12 because it was compounded 12 times in a year.
t = 10 years
Therefore,
A = 16000(1 + 0.03/12)^12 × 10
A = 16000(1 + 0.0025)^120
A = 16000(1.0025)^120
A = $21591
Therefore,
Account B is worth the most after 10 years. It will have a value of $21591
